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RAMON C. LEE and ANTONIO DM. LACDAO, petitioners, vs. CA, SACOBA MANUFACTURING CORP., PABLO GONZALES, JR.

and THOMAS
GONZALES, respondents. (1992)

What is the nature of the voting trust agreement executed between two parties in this case? Who owns the stocks of the corporation under
the terms of the voting trust agreement? How long can a voting trust agreement remain valid and effective? Did a director of the corporation
cease to be such upon the creation of the voting trust agreement?

The law simply provides that a voting trust agreement is an agreement in writing whereby one or more stockholders of a corporation consent
to transfer his or their shares to a trustee in order to vest in the latter voting or other rights pertaining to said shares for a period not exceeding
five years upon the fulfillment of statutory conditions and such other terms and conditions specified in the agreement. The five year-period
may be extended in cases where the voting trust is executed pursuant to a loan agreement whereby the period is made contingent upon full
payment of the loan….By its very nature, a voting trust agreement results in the separation of the voting rights of a stockholder from his other
rights such as the right to receive dividends, the right to inspect the books of the corporation, the right to sell certain interests in the assets
of the corporation and other rights to which a stockholder may be entitled until the liquidation of the corporation. However, in order to
distinguish a voting trust agreement from proxies and other voting pools and agreements, it must pass three criteria or tests, namely: (1) that
the voting rights of the stock are separated from the other attributes of ownership; (2) that the voting rights granted are intended to be
irrevocable for a definite period of time; and (3) that the principal purpose of the grant of voting rights is to acquire voting control of the
corporation.

Under section 59 of the Corporation Code,, a voting trust agreement may confer upon a trustee not only the stockholder's voting rights but
also other rights pertaining to his shares as long as the voting trust agreement is not entered "for the purpose of circumventing the law
against monopolies and illegal combinations in restraint of trade or used for purposes of fraud." Thus, the traditional concept of a voting trust
agreement primarily intended to single out a stockholder's right to vote from his other rights as such and made irrevocable for a limited
duration may in practice become a legal device whereby a transfer of the stockholder's shares is effected subject to the specific provision of
the voting trust agreement.

The petitioners maintain that with the execution of the voting trust agreement between them and the other stockholders of ALFA, as one
party, and the DBP, as the other party, the former assigned and transferred all their shares in ALFA to DBP, as trustee. They argue that by
virtue to of the voting trust agreement the petitioners can no longer be considered directors of ALFA. In support of their contention, the
petitioners invoke section 23 of the Corporation Code. The private respondents, on the contrary, insist that the voting trust agreement
between ALFA and the DBP had all the more safeguarded the petitioners' continuance as officers and directors of ALFA inasmuch as the
general object of voting trust is to insure permanency of the tenure of the directors of a corporation.

We find the petitioners' position meritorious.

Both under the old and the new Corporation Codes there is no dispute as to the most immediate effect of a voting trust agreement on the
status of a stockholder who is a party to its execution — from legal titleholder or owner of the shares subject of the voting trust agreement,
he becomes the equitable or beneficial owner. The penultimate question, therefore, is whether the change in his status deprives the
stockholder of the right to qualify as a director under section 23 of the present Corporation Code…The facts of this case show that the
petitioners, by virtue of the voting trust agreement executed in 1981 disposed of all their shares through assignment and delivery in favor of
the DBP, as trustee. Consequently, the petitioners ceased to own at least one share standing in their names on the books of ALFA as required
under Section 23 of the new Corporation Code. They also ceased to have anything to do with the management of the enterprise. The
petitioners ceased to be directors. The transfer of shares from the stockholder of ALFA to the DBP is the essence of the subject voting trust
agreement.

Considering that the voting trust agreement between ALFA and the DBP transferred legal ownership of the stock covered by the agreement
to the DBP as trustee, the latter became the stockholder of record with respect to the said shares of stocks. In the absence of a showing that
the DBP had caused to be transferred in their names one share of stock for the purpose of qualifying as directors of ALFA, the petitioners can
no longer be deemed to have retained their status as officers of ALFA which was the case before the execution of the subject voting trust
agreement. There appears to be no dispute from the records that DBP has taken over full control and management of the firm.

There can be no reliance on the inference that the five-year period of the voting trust agreement in question had lapsed in 1986 so that the
legal title to the stocks covered by the said voting trust agreement ipso facto reverted to the petitioners as beneficial owners pursuant to the
6th paragraph of section 59 of the new Corporation Code… there is evidence on record that at the time of the service of summons on ALFA
through the petitioners on August 21, 1987, the voting trust agreement in question was not yet terminated so that the legal title to the stocks
of ALFA, then, still belonged to the DBP.

In view of the foregoing, the ultimate issue of whether or not there was proper service of summons on ALFA through the petitioners is readily
answered in the negative...The petitioners in this case do not fall under any of the enumerated officers. The service of summons upon ALFA,
through the petitioners, therefore, is not valid. To rule otherwise, as correctly argued by the petitioners, will contravene the general principle
that a corporation can only be bound by such acts which are within the scope of the officer's or agent's authority.
REPUBLIC OF THE PHILIPPINES (PCGG), petitioner, vs. SANDIGANBAYAN and VICTOR AFRICA, respondents. (2003)

ISSUES: Whether the PCGG can vote the sequestered ETPI Class “A” shares in the stockholders meeting for the election of the board of
directors.

HELD:
The principle laid down in Baseco vs. PCGG was further enhanced in the subsequent cases of Cojuangco v. Calpo and Presidential Commission
on Good Government v. Cojuangco, Jr., where the Court developed a “two-tiered” test in determining whether the PCGG may vote
sequestered shares. The issue of whether PCGG may vote the sequestered shares in SMC necessitates a determination of at least two factual
matters: a.) whether there is prima facie evidence showing that the said shares are ill-gotten and thus belong to the state; and b.) whether
there is an immediate danger of dissipation thus necessitating their continued sequestration and voting by the PCGG while the main issue
pends with the Sandiganbayan. The two-tiered test, however, does not apply in cases involving funds of “public character.” In such cases, the
government is granted the authority to vote said shares, namely: (1) Where government shares are taken over by private persons or entities
who/which registered them in their own names, and (2) Where the capitalization or shares that were acquired with public funds somehow
landed in private hands. In short, when sequestered shares registered in the names of private individuals or entities are alleged to have been
acquired with ill-gotten wealth, then the two-tiered test is applied. However, when the sequestered shares in the name of private individuals
or entities are shown, prima facie, to have been (1) originally government shares, or (2) purchased with public funds or those affected with
public interest, then the two-tiered test does not apply. The rule in the jurisdiction is, therefore, clear. The PCGG cannot perform acts of strict
ownership of sequestered property. It is a mere conservator. It may not vote the shares in a corporation and elect members of the board of
directors. The only conceivable exception is in a case of a takeover of a business belonging to the government or whose capitalization comes
from public funds, but which landed in private hands as in BASECO. In short, the Sandiganbayan held that the public character exception does
not apply, in which case it should have proceeded to apply the two-tiered test. This it failed to do. The questions thus remain if there is prima
facie evidence showing that the subject shares are ill- gotten and if there is imminent danger of dissipation. The Court is not, however, a trier
of facts, hence, it is not in a position to rule on the correctness of the PCGG’s contention. Consequently, the issue must be remanded to the
Sandiganbayan for resolution.

(One thing is certain, and should be stated at the outset: the PCGG cannot exercise acts of dominion over property sequestered, frozen or
provisionally taken over. As already earlier stressed with no little insistence, the act of sequestration[,] freezing or provisional takeover of
property does not import or bring about a divestment of title over said property; [it] does not make the PCGG the owner thereof. In relation
to the property sequestered, frozen or provisionally taken over, the PCGG is a conservator, not an owner…The PCGG may thus exercise only
powers of administration over the property or business sequestered or provisionally taken over, much like a court-appointed receiver, (may
generally do such other acts and things as may be necessary to fulfill its mission as conservator and administrator)

Now, in the special instance of a business enterprise shown by evidence to have been taken over by the government of the Marcos
Administration or by entities or persons close to former President Marcos, the PCGG is given power and authority, as already adverted to, to
provisionally take (it) over in the public interest or to prevent * * (its) disposal or dissipation; and since the term is obviously employed in
reference to going concerns, or business enterprises in operation, something more than mere physical custody is connoted; the PCGG may
in this case exercise some measure of control in the operation, running, or management of the business itself.

So, too, it is within the parameters of these conditions and circumstances that the PCGG may properly exercise the prerogative to vote
sequestered stock of corporations, granted to it by the President of the Philippines through a Memorandum dated June 26, 1986. That
Memorandum authorizes the PCGG, pending the outcome of proceedings to determine the ownership of * * (sequestered) shares of stock,
to vote such shares of stock as it may have sequestered in corporations at all stockholders meetings called for the election of directors,
declaration of dividends, amendment of the Articles of Incorporation, etc.

In the case at bar, there was adequate justification to vote the incumbent directors out of office and elect others in their stead because the
evidence showed prima facie that the former were just tools of President Marcos and were no longer owners of any stock in the firm, if they
ever were at all.

The PCGG cannot thus vote sequestered shares, except when there are demonstrably weighty and defensible grounds or when essential to
prevent disappearance or wastage of corporate property.

The rule in this jurisdiction is, therefore, clear. The PCGG cannot perform acts of strict ownership of sequestered property. It is a mere
conservator. It may not vote the shares in a corporation and elect the members of the board of directors. The only conceivable exception is
in a case of a takeover of a business belonging to the government or whose capitalization comes from public funds, but which landed in
private hands

In short, when sequestered shares registered in the names of private individuals or entities are alleged to have been acquired with ill-gotten
wealth, then the two-tiered test is applied. However, when the sequestered shares in the name of private individuals or entities are shown,
prima facie, to have been (1) originally government shares, or (2) purchased with public funds or those affected with public interest, then the
two-tiered test does not apply. Rather, the public character exception prevail; that is, the government shall vote the shares.)
REPUBLIC OF THE PHILIPPINES, represented by the PCGG, petitioner, vs. COCOFED, ET AL. and BALLARES, ET AL., EDUARDO M. COJUANGCO
JR. and the SANDIGANBAYAN (First Division) respondents.(2001)

Issue: Whether the PCGG can vote the sequestered UCPB shares.

Held: The registered owner of the shares of a corporation exercises the right and the privilege of voting. This principle applies even to shares
that are sequestered by the government, over which the PCGG as a mere conservator cannot, as a general rule, exercise acts of dominion.
On the other hand, it is authorized to vote these sequestered shares registered in the names of private persons and acquired with allegedly
ill-gotten wealth, if it is able to satisfy the two-tiered test devised by the Court in Cojuangco v. Calpo and PCGG v. Cojuangco Jr. Two clear
“public character” exceptions under which the government is granted the authority to vote the shares exist (1) Where government shares
are taken over by private persons or entities who/which registered them in their own names, and (2) Where the capitalization or shares that
were acquired with public funds somehow landed in private hands. The exceptions are based on the common-sense principle that legal fiction
must yield to truth; that public property registered in the names of non-owners is affected with trust relations; and that the prima facie
beneficial owner should be given the privilege of enjoying the rights flowing from the prima facie fact of ownership. In short, when
sequestered shares registered in the names of private individuals or entities are alleged to have been acquired with ill-gotten wealth, then
the two-tiered test is applied. However, when the sequestered shares in the name of private individuals or entities are shown, prima facie,
to have been (1) originally government shares, or (2) purchased with public funds or those affected with public interest, then the two-tiered
test does not apply. Rather, the public character exceptions in Baseco v. PCGG and Cojuangco Jr. v. Roxas prevail; that is, the government
shall vote the shares. Herein, the money used to purchase the sequestered UCPB shares came from the Coconut Consumer Stabilization Fund
(CCSF), otherwise known as the coconut levy funds. The sequestered UCPB shares are confirmed to have been acquired with coco levies, not
with alleged ill-gotten wealth. As the coconut levy funds are not only affected with public interest, but are in fact prima facie public funds,
the Court believes that the government should be allowed to vote the questioned shares, because they belong to it as the prima facie
beneficial and true owner. The Sandiganbayan committed grave abuse of discretion in grossly contradicting and effectively reversing existing
jurisprudence, and in depriving the government of its right to vote the sequestered UCPB shares which are prima facie public in character.

it is necessary to restate the general rule that the registered owner of the shares of a corporation exercises the right and the privilege of
voting. (Sec. 24, BP 68) This principle applies even to shares that are sequestered by the government, over which the PCGG as a mere
conservator cannot, as a general rule, exercise acts of dominion. On the other hand, it is authorized to vote these sequestered shares
registered in the names of private persons and acquired with allegedly ill-gotten wealth, if it is able to satisfy the two-tiered test devised by
the Court as follows:
(1) Is there prima facie evidence showing that the said shares are ill-gotten and thus belong to the State?
(2) Is there an imminent danger of dissipation, thus necessitating their continued sequestration and voting by the PCGG, while the main issue
is pending with the Sandiganbayan?

The Court in Baseco v. PCGG has provided two clear “public character” exceptions under which the government is granted the authority to
vote the shares:
(1) Where government shares are taken over by private persons or entities who/which registered them in their own names, and
(2) Where the capitalization or shares that were acquired with public funds somehow landed in private hands.

This Court in determining the issue of whether the PCGG should be allowed to vote sequestered shares, it was crucial to find out first whether
these were purchased with public funds, as follows:
…when sequestered shares registered in the names of private individuals or entities are alleged to have been acquired with ill-gotten
wealth, then the two-tiered test is applied. However, when the sequestered shares in the name of private individuals or entities are shown,
prima facie, to have been (1) originally government shares, or (2) purchased with public funds or those affected with public interest, then the
two-tiered test does not apply. Rather, the public character exceptions prevail; that is, the government shall vote the shares.

In the present case before the Court, it is not disputed that the money used to purchase the sequestered UCPB shares came from the Coconut
Consumer Stabilization Fund (CCSF), otherwise known as the coconut levy funds. “The coconut levy funds being ‘clearly affected with public
interest, it follows that the corporations formed and organized from those funds, and all assets acquired therefrom should also be regarded
as ‘clearly affected with public interest.’” The coconut levy funds are not only affected with public interest; they are, in fact, prima facie public
funds. Public funds are those moneys belonging to the State or to any political subdivision of the State; more specifically, taxes, customs
duties and moneys raised by operation of law for the support of the government or for the discharge of its obligations. Undeniably, coconut
levy funds satisfy this general definition of public funds, because of the following reasons:1. Coconut levy funds are raised with the use of the
police and taxing powers of the State. 2. They are levies imposed by the State for the benefit of the coconut industry and its farmers. 3.
Respondents have judicially admitted that the sequestered shares were purchased with public funds. 4. The Commission on Audit (COA)
reviews the use of coconut levy funds. 5. The Bureau of Internal Revenue (BIR), with the acquiescence of private respondents, has treated
them as public funds. 6. The very laws governing coconut levies recognize their public character.

Having shown that the coconut levy funds are not only affected with public interest, but are in fact prima facie public funds, this Court believes
that the government should be allowed to vote the questioned shares, because they belong to it as the prima facie beneficial and true owner.
JUAN D. EVANGELISTA ET AL., plaintiffs-appellants, vs. RAFAEL SANTOS, defendant-appellee. (1950)

The appeal presents two questions. The first refers to venue and the second, to the right of the plaintiffs to bring this action for
their benefit.

As to the second question, the complaint shows that the action is for damages resulting from mismanagement of the affairs and
assets of the corporation by its principal officer, it being alleged that defendant's maladministration has brought about the ruin
of the corporation and the consequent loss of value of its stocks. The injury complained of is thus primarily to the corporation,
so that the suit for the damages claimed should be by the corporation rather than by the stockholders (3 Fletcher, Cyclopedia of
Corporation pp. 977-980). The stockholders may not directly claim those damages for themselves for that would result in the
appropriation by, and the distribution among them of part of the corporate assets before the dissolution of the corporation and
the liquidation of its debts and liabilities, something which cannot be legally done in view of section 16 of the Corporation Law,
which provides:

No shall corporation shall make or declare any stock or bond dividend or any dividend whatsoever from the profits arising from
its business, or divide or distribute its capital stock or property other than actual profits among its members or stockholders until
after the payment of its debts and the termination of its existence by limitation or lawful dissolution.

But while it is to the corporation that the action should pertain in cases of this nature, however, if the officers of the corporation,
who are the ones called upon to protect their rights, refuse to sue, or where a demand upon them to file the necessary suit
would be futile because they are the very ones to be sued or because they hold the controlling interest in the corporation, then
in that case any one of the stockholders is allowed to bring suit (3 Fletcher's Cyclopedia of Corporations, pp. 977-980). But in
that case it is the corporation itself and not the plaintiff stockholder that is the real property in interest, so that such damages
as may be recovered shall pertain to the corporation (Pascual vs. Del Saz Orosco, 19 Phil. 82, 85). In other words, it is a derivative
suit brought by a stockholder as the nominal party plaintiff for the benefit of the corporation, which is the real property in
interest

In the present case, the plaintiff stockholders have brought the action not for the benefit of the corporation but for their own
benefit, since they ask that the defendant make good the losses occasioned by his mismanagement and pay to them the value
of their respective participation in the corporate assets on the basis of their respective holdings. Clearly, this cannot be done
until all corporate debts, if there be any, are paid and the existence of the corporation terminated by the limitation of its charter
or by lawful dissolution in view of the provisions of section 16 of the Corporation Law.

It results that plaintiff's complaint shows no cause of action in their favor so that the lower court did not err in dismissing the
complaint on that ground.

While plaintiffs ask for remedy to which they are not entitled unless the requirement of section 16 of the Corporation Law be
first complied with, we note that the action stated in their complaint is susceptible of being converted into a derivative suit for
the benefit of the corporation by a mere change in the prayer. Such amendment, however, is not possible now, since the
complaint has been filed in the wrong court, so that the same last to be dismissed.

The order appealed from is therefore affirmed, but without prejudice to the filing of the proper action in which the venue shall
be laid in the proper province.
FRANCIS CHUA, petitioner, vs. HON. COURT OF APPEALS and LYDIA C. HAO, respondents. (2004)

Petitioner had argued before the Court of Appeals that respondent had no authority whatsoever to bring a suit in behalf of the Corporation
since there was no Board Resolution authorizing her to file the suit.

For her part, respondent Hao claimed that the suit was brought under the concept of a derivative suit. Respondent maintained that when
the directors or trustees refused to file a suit even when there was a demand from stockholders, a derivative suit was allowed.

The pertinent issues in this petition are the following: (1) Is the criminal complaint in the nature of a derivative suit? (2) Is Siena Realty
Corporation a proper petitioner in SCA No. 99-94846?

On the first issue, petitioner claims that the Court of Appeals erred when (1) it sustained the lower court in giving due course to respondents
petition in SCA No. 99-94846 despite the fact that the Corporation was not the private complainant in Criminal Case No. 285721, and (2)
when it ruled that Criminal Case No. 285721 was in the nature of a derivative suit.

Petitioner avers that a derivative suit is by nature peculiar only to intra-corporate proceedings and cannot be made part of a criminal action.

(Among the basic requirements for a derivative suit to prosper is that the minority shareholder who is suing for and on behalf of the
corporation must allege in his complaint before the proper forum that he is suing on a derivative cause of action on behalf of the corporation
and all other shareholders similarly situated who wish to join)

Under Section 36 of the Corporation Code, read in relation to Section 23, where a corporation is an injured party, its power to sue is lodged
with its board of directors or trustees. An individual stockholder is permitted to institute a derivative suit on behalf of the corporation wherein
he holds stocks in order to protect or vindicate corporate rights, whenever the officials of the corporation refuse to sue, or are the ones to
be sued, or hold the control of the corporation. In such actions, the suing stockholder is regarded as a nominal party, with the corporation as
the real party in interest.

A derivative action is a suit by a shareholder to enforce a corporate cause of action. The corporation is a necessary party to the suit. And the
relief which is granted is a judgment against a third person in favor of the corporation. Similarly, if a corporation has a defense to an action
against it and is not asserting it, a stockholder may intervene and defend on behalf of the corporation.[17]

Under the Revised Penal Code, every person criminally liable for a felony is also civilly liable.[18] When a criminal action is instituted, the civil
action for the recovery of civil liability arising from the offense charged shall be deemed instituted with the criminal action, unless the
offended party waives the civil action, reserves the right to institute it separately or institutes the civil action prior to the criminal action.[19]

In Criminal Case No. 285721, the complaint was instituted by respondent against petitioner for falsifying corporate documents whose subject
concerns corporate projects of Siena Realty Corporation. Clearly, Siena Realty Corporation is an offended party. Hence, Siena Realty
Corporation has a cause of action. And the civil case for the corporate cause of action is deemed instituted in the criminal action.

Private respondent asserts that she filed a derivative suit in behalf of the corporation. This assertion is inaccurate. Not every suit filed in
behalf of the corporation is a derivative suit. For a derivative suit to prosper, it is required that the minority stockholder suing for and on
behalf of the corporation must allege in his complaint that he is suing on a derivative cause of action on behalf of the corporation and all
other stockholders similarly situated who may wish to join him in the suit.[20] It is a condition sine qua non that the corporation be impleaded
as a party because not only is the corporation an indispensable party, but it is also the present rule that it must be served with process. The
judgment must be made binding upon the corporation in order that the corporation may get the benefit of the suit and may not bring
subsequent suit against the same defendants for the same cause of action. In other words, the corporation must be joined as party because
it is its cause of action that is being litigated and because judgment must be a res adjudicata against it.[21]

In the criminal complaint filed by herein respondent, nowhere is it stated that she is filing the same in behalf and for the benefit of the
corporation. Thus, the criminal complaint including the civil aspect thereof could not be deemed in the nature of a derivative suit.

We turn now to the second issue, is the corporation a proper party in the petition for certiorari under Rule 65 before the RTC? Petitioner
before us now claims that the corporation is not a private complainant in Criminal Case No. 285721, and thus cannot be included as appellant
in SCA No. 99-94846. Respondent claims that the complaint was filed by her not only in her personal capacity, but likewise for the benefit of
the corporation. Additionally, she avers that she has exhausted all remedies available to her before she instituted the case, not only to claim
damages for herself but also to recover the damages caused to the company.

In the instant case, we find that the recourse of the complainant to the respondent Court of Appeals was proper. The petition was brought
in her own name and in behalf of the Corporation. Although, the corporation was not a complainant in the criminal action, the subject of the
falsification was the corporations project and the falsified documents were corporate documents. Therefore, the corporation is a proper
party in the petition for certiorari because the proceedings in the criminal case directly and adversely affected the corporation.
EXPERTRAVEL & TOURS, INC., petitioner, vs. COURT OF APPEALS and KOREAN AIRLINES, respondents. (2005)

ETI filed a motion to dismiss the complaint on the ground that Atty. Aguinaldo was not authorized to execute the verification
and certificate of non-forum shopping as required by Section 5, Rule 7 of the Rules of Court. KAL opposed the motion, contending
that Atty. Aguinaldo was its resident agent and was registered as such with the Securities and Exchange Commission (SEC) as
required by the Corporation Code of the Philippines. It was further alleged that Atty. Aguinaldo was also the corporate secretary
of KAL.

The petitioner pointed out that there are no rulings on the matter of teleconferencing as a means of conducting meetings of
board of directors for purposes of passing a resolution; until and after teleconferencing is recognized as a legitimate means of
gathering a quorum of board of directors, such cannot be taken judicial notice of by the court.

The petitioner further avers that the supposed holding of a special meeting on June 25, 1999 through teleconferencing where
Atty. Aguinaldo was supposedly given such an authority is a farce, considering that there was no mention of where it was held,
whether in this country or elsewhere. It insists that the Corporation Code requires board resolutions of corporations to be
submitted to the SEC. Even assuming that there was such a teleconference, it would be against the provisions of the Corporation
Code not to have any record thereof.

The petitioner insists that the teleconference and resolution adverted to by the respondent in its pleadings were mere
fabrications foisted by the respondent and its counsel on the RTC, the CA and this Court.

The petition is meritorious.

It is settled that the requirement to file a certificate of non-forum shopping is mandatory[8] and that the failure to comply with
this requirement cannot be excused. In a case where the plaintiff is a private corporation, the certification may be signed, for
and on behalf of the said corporation, by a specifically authorized person, including its retained counsel, who has personal
knowledge of the facts required to be established by the documents.
While Atty. Aguinaldo is the resident agent of the respondent in the Philippines, this does not mean that he is authorized to
execute the requisite certification against forum shopping. Under Section 127, in relation to Section 128 of the Corporation Code,
the authority of the resident agent of a foreign corporation with license to do business in the Philippines is to receive, for and in
behalf of the foreign corporation, services and other legal processes in all actions and other legal proceedings against such
corporation

Under the law, Atty. Aguinaldo was not specifically authorized to execute a certificate of non-forum shopping as required by
Section 5, Rule 7 of the Rules of Court. This is because while a resident agent may be aware of actions filed against his principal
(a foreign corporation doing business in the Philippines), such resident may not be aware of actions initiated by its principal,
whether in the Philippines against a domestic corporation or private individual, or in the country where such corporation was
organized and registered, against a Philippine registered corporation or a Filipino citizen.

Even given the possibility that Atty. Aguinaldo and Suk Kyoo Kim participated in a teleconference along with the respondents
Board of Directors, the Court is not convinced that one was conducted; even if there had been one, the Court is not inclined to
believe that a board resolution was duly passed specifically authorizing Atty. Aguinaldo to file the complaint and execute the
required certification against forum shopping.

The respondents allegation that its board of directors conducted a teleconference on June 25, 1999 and approved the said
resolution (with Atty. Aguinaldo in attendance) is incredible, given the additional fact that no such allegation was made in the
complaint. If the resolution had indeed been approved on June 25, 1999, long before the complaint was filed, the respondent
should have incorporated it in its complaint, or at least appended a copy thereof. The respondent failed to do so.

The Court is, thus, more inclined to believe that the alleged teleconference on June 25, 1999 never took place, and that the
resolution allegedly approved by the respondents Board of Directors during the said teleconference was a mere concoction
purposefully foisted on the RTC, the CA and this Court, to avert the dismissal of its complaint against the petitioner.
RAMON A. GONZALES, petitioner, vs. THE PHILIPPINE NATIONAL BANK, respondent. (1983)

The court a quo denied the prayer of the petitioner that he be allowed to examine and inspect the books and records of the
respondent bank regarding the transactions mentioned on the grounds that the right of a stockholder to inspect the record of
the business transactions of a corporation granted under Section 51 of the former Corporation Law (Act No. 1459, as amended)
is not absolute, but is limited to purposes reasonably related to the interest of the stockholder, must be asked for in good faith
for a specific and honest purpose and not gratify curiosity or for speculative or vicious purposes; that such examination would
violate the confidentiality of the records of the respondent bank as provided in Section 16 of its charter, Republic Act No. 1300,
as amended; and that the petitioner has not exhausted his administrative remedies.

Assailing the conclusions of the lower court, the petitioner has assigned the single error to the lower court of having ruled that
his alleged improper motive in asking for an examination of the books and records of the respondent bank disqualifies him to
exercise the right of a stockholder to such inspection under Section 51 of Act No. 1459, as amended.

Sec. 51. ... The record of all business transactions of the corporation and the minutes of any meeting shall be open to the
inspection of any director, member or stockholder of the corporation at reasonable hours.

Petitioner may no longer insist on his interpretation of Section 51 of Act No. 1459, as amended, regarding the right of a
stockholder to inspect and examine the books and records of a corporation. The former Corporation Law (Act No. 1459, as
amended) has been replaced by Batas Pambansa Blg. 68, otherwise known as the "Corporation Code of the Philippines."

The right of inspection granted to a stockholder under Section 51 of Act No. 1459 has been retained, but with some modifications.
(as provided under the second and third paragraphs of Section 74 of Batas Pambansa Blg. 68)

among the changes introduced in the new Code with respect to the right of inspection granted to a stockholder are the following
the records must be kept at the principal office of the corporation; the inspection must be made on business days; the
stockholder may demand a copy of the excerpts of the records or minutes; and the refusal to allow such inspection shall subject
the erring officer or agent of the corporation to civil and criminal liabilities. However, while seemingly enlarging the right of
inspection, the new Code has prescribed limitations to the same. It is now expressly required as a condition for such examination
that the one requesting it must not have been guilty of using improperly any information through a prior examination, and that
the person asking for such examination must be "acting in good faith and for a legitimate purpose in making his demand."

Although the petitioner has claimed that he has justifiable motives in seeking the inspection of the books of the respondent bank,
he has not set forth the reasons and the purposes for which he desires such inspection, except to satisfy himself as to the truth
of published reports regarding certain transactions entered into by the respondent bank and to inquire into their validity. The
circumstances under which he acquired one share of stock in the respondent bank purposely to exercise the right of inspection
do not argue in favor of his good faith and proper motivation. Admittedly he sought to be a stockholder in order to pry into
transactions entered into by the respondent bank even before he became a stockholder. His obvious purpose was to arm himself
with materials which he can use against the respondent bank for acts done by the latter when the petitioner was a total stranger
to the same. He could have been impelled by a laudable sense of civic consciousness, but it could not be said that his purpose is
germane to his interest as a stockholder.

We also find merit in the contention of the respondent bank that the inspection sought to be exercised by the petitioner would
be violative of the provisions of its charter. The Philippine National Bank is not an ordinary corporation. Having a charter of its
own, it is not governed, as a rule, by the Corporation Code of the Philippines. Section 4 of the said Code provides:

SEC. 4. Corporations created by special laws or charters. — Corporations created by special laws or charters shall be governed
primarily by the provisions of the special law or charter creating them or applicable to them supplemented by the provisions of
this Code, insofar as they are applicable.

The provision of Section 74 of Batas Pambansa Blg. 68 of the new Corporation Code with respect to the right of a stockholder to
demand an inspection or examination of the books of the corporation may not be reconciled with the abovequoted provisions
of the charter of the respondent bank. It is not correct to claim, therefore, that the right of inspection under Section 74 of the
new Corporation Code may apply in a supplementary capacity to the charter of the respondent bank.